Common Ticketing Strategies in Sports

This essay gives a broad overview about the marketing theory behind the term ‘strategy’ and describes why and how strategies are developed and used. Finally it gives an overview about three common ticketing strategy approaches used by professional sports clubs nowadays.

In my post from the 28^th October I identified three reasons why on-site spectators are crucial for every sport club. In addition to these reasons, Drayer et al. (2012: 184) argue that facts like increasing revenue needs, through for instance growing player salaries and operational expenses, and latest technological developments force sport marketers to seek for more effective ticketing strategies in order to meet the organisations’ needs.

Generally speaking a strategy could be defined as “a plan of action designed to achieve a long-term or overall aim” (Oxford 2014). Although the sport business is characterised through certain particularities and generic marketing measures cannot be simply adopted without adapting them, it is worth considering the not sport related marketing theory at this point in order to provide a basic theoretical foundation. According to Palmer (2007: 23) a successful marketing management process consists of the four fundamental stages analysis, planning, implementation and control, whereat the planning stage comprises the development of a strategy based on the specific circumstances identified during the analysis stage. It is also generally acknowledged that, event though there are particular situations that require specific marketing strategies like for example the introduction of a new product, an on-going implementation of marketing measures is crucial for an organisation in order to reach its objectives on a permanent basis (Hooley et al. 2004: 44-47; Palmer 2007: 23; Jobber & Ellis-Chadwick 2013: 54-58).

When it comes to selling tickets, the sport related literature agrees on the perception that there is a wide array of strategies and tactics that could be used to pursue ticketing objectives. However, there is also accordance about the fact that a ticketing strategy is never a ‘one size fits all’ model. Instead a customised approach, which considers the specific circumstances of the particular organisation, is required (Irwin et al. 2008: 88-91; Meir & Arthur 2007: 322/323; Fullerton 2010: 4/523; Lee & Kang 2011; Rishe & Mondello 2003). Nevertheless there are, as listed below, several acknowledged basic practices, which are nowadays considered to be expedient.

According to basic marketing theories, a strategy is always linked to particular objectives, defined during the analysis and the planning stage, which are again linked to the corporate objectives of the overall organisation (Rowley 1997; Meir & Arthur 2007: 326; Shilbury et al. 2009: 35). For sport clubs this circumstance becomes obvious when comparing the objectives of the profit orientated franchise clubs in most North American Major Leagues with the not-for-profit approach in, for instance, German basketball (Dietl et al. 2011). Whether a club follows the objective of revenue maximisation or increasing the attendance (Lee & Kang 2011), the overall purpose of developing a (ticketing) strategy is to gain a competitive advantage towards direct and indirect competitors (Schwarz & Hunter 2008: 9; Shilbury et al. 2009: 35). This is mainly achieved through adapting an organisation’s marketing mix (4 Ps, respectively 7 Ps) to the specific needs of the customers (Palmer 2004: 19).

Although all parts of the marketing mix are important and should not be neglected, the ‘Price’ element could be considered as the most crucial one when it comes to ticketing strategies (Lee & Kang 2011; Drayer et al. 2012; Shapiro & Drayer 2014; Irwin et al. 2008: 89; Fullerton 2010: 523). One major reason for that is the fact that Price is the only element of the marketing mix which actually generates revenue (Kotler & Armstrong 2004; Clowes & Clements 2003) as well as the fact that price significantly influences the decision making of customers, as described later in this passage.

When it comes to ticketing strategies, broadly defined it could be distinguished between four different ticketing strategy approaches, which also demonstrate the development over time from a comparable simple approach right up to complex strategies, based on latest marketing insights.

The first and most simple strategy is based on a ‘one size fits all’ concept where clubs charge the same price for every ticket and every game throughout the whole season (Drayer et al. 2012: 184).

The seconds approach alters this strategy and is also known under the terminology ‘discriminatory ticket pricing’. It mainly comprises different prices for different seat categories (e.g. standing stands versus courtside seats) and different customer segments, such as discounts for students and children (Fullerton 2010: 526; Meir & Arthur 2007: 333; Rishe & Mondello 2003: 73; Drayer et al. 2012: 184).

The third approach is called ‘Variable Pricing’ (hereinafter known as VP) and means “selling a seat for different prices depending upon timing or the opponent” (Fullerton 2010: 527). This strategy takes factors like demand and attractiveness of the game into account and aims primarily on maximising the attendance at low-demand games and increasing the revenue at more popular ones (Drayer et al. 2012: 188; King 2002; Drayer & Shapiro 2011; Mullin et al. 2007: 227). Commonly a VP strategy divides the totality of games per season into two or three categories, each representing teams with the same projected attractiveness and demand (Clowes & Clements 2003: 116). Timing is the second major factor the strategy takes into account. Because different times and dates, for instance weekdays versus weekends or public holidays, create different demands, different prices for peak and off-peak games seem to be advisable (Blakey 2011: 86). According to Cameron (2002) the two requirements for a successful implementation of a VP strategy are to keep accurate transaction records and to consider the interests of season tickets holders.

The fourth and most complex approach develops the aforementioned VP strategy further and is known as ‘Dynamic Ticket Pricing’ (hereinafter known as DTP). In 2009 the San Francisco Giants (Major League Baseball) became the first professional sports team which introduced a purely DTP based strategy. Beside the aforementioned timing and opponent, the DTP considers numerous internal and external factors as for instance player performances or even the weather. By using a special DTP technology, clubs can set and adapt ticket prices in real time which allows them to quickly react to demand changes and achieve both, revenue and attendance maximisation objectives (Drayer et al. 2012; Shapiro & Drayer 2014; Rishe 2012). Although DTP, which originally comes from the airline and hotel industry, is nowadays successfully established at some primarily North American sports clubs, Drayer et al. (2012) emphasise the challenges and risks associated with the implementation of such a strategy. Due to missing know-how and technology developed for the specifics of the European market, as well as the lack of required relevant customer information and empirical values at most clubs, considering a DTP strategy for the case of any professional club in Germany seems not to be expedient at this point.

The circumstance that most clubs already altered their ticket prices based on different seat categories and customer segments, as well as the fact that the DTP approach is not effective viable at this point, shifts the focus upon a VP strategy. Researches prove that there are several sport leagues that already implemented the VP approach successfully, including some clubs of the football Premier League (Clowes & Clements 2003), the National Football League (Rishe & Mondello 2003), some clubs of the Major League Baseball (King 2002), and in several college sports (Mullin et al. 2007: 228) to name but a few. In near future hopefully some more will follow!

A list of references and literature used in this essay is available upon request.

Determining the Attractiveness of Away Teams – Using the Example of the Beko BBL in 2013/14

Many sport clubs are looking for ways to increase the attendance figures at home games against especially less attractive opponents and at off-peak times, and furthermore to gain higher revenues at top matches. Dynamic Ticketing and Variable Pricing are two approaches of how to create the ticketing more demand orientated and therefore more target-oriented. Nowadays only a few major league clubs in the US use Dynamic Ticketing. As it requires comprehensive consumer data and a heavily customised IT system developed for the case of the specific club, Dynamic Ticket is basically not yet implemented by clubs in Europe.

A more simple approach, compared to the aforementioned one, is called Variable Pricing. This strategy takes factors like demand and attractiveness of the game into account. Commonly a Variable Pricing strategy divides the totality of games per season into two or three categories, each representing teams with the same projected attractiveness and demand, based on the two factors attractiveness of the opponent and timing (e.g. weekend vs. weekday).

The following framework shows one approach of how to determine the attractiveness of away teams for the case of the German Basketball Bundesliga, the Beko BBL.The figure below gives an overview about how many spectators the individual away teams (rows) attracted during the Beko BBL season 2013/14 when playing at home games of the host teams (columns). The figures are based on the official data given by the Beko BBL (http://bit.ly/1wqLnCT). Each of the given percentages indicates the ratio between the average attendance of the individual home team and the concrete attendance at the concrete game. The colours red and green indicate whether the away team attracted an attendance of less than 5 % compared to the home team’s average, or the away team attracted an attendance of more than 5 % compared to the average of the home team. The example of the FC Bayern Munich shows that every given percentage is green, what indicates that more spectators came to see their home teams playing against the FCB than spectators come in average to the home games of their clubs.

Attracted spectators at away games of Beko BBL clubs in 2013/14
(click to enlarge)

The next figure summarizes the findings of the table above into an overview about which Beko BBL teams could be described as attractive opponents and which as less attractive opponents. Column three shows at how many games the individual away club attracted more spectators than the normal home game average, and column four shows the opposite, thus games on which they attracted fewer spectators. Column seven calculates the summed up positive percentages and negative percentages to a final figure of how attractive the respective club as a guest team is. All figures coloured in green indicate attractive clubs whereas all red coloured figures indicate less attractive clubs. The framework used in this example could be adapted for more or less every sport and used by sport marketers to determine the demand for every encounter of the season and build therefore the basis for further marketing measures, for example a Variable Pricing strategy.

Overview about attractive and less attractive clubs of the Beko BBL in 2013/14,
based on spectators attracted at away games
(click to enlarge)

Investigation and Analyses of the main Marketing Activities of the Rugby Football League

The competition within the leisure entertainment market has grown noticeable over the last years. All kind of providers are competing against a flood of different leisure suppliers. The same situation is true for sports clubs, which have to contend for money and time of the customers against other sports clubs, theatres, cinemas and so forth. In the case of sports clubs the customers as spectators take special positions because they are simultaneously necessary to create the atmosphere at the grounds, which is part of the sport product. This situation, together with the fact that spectators are responsible for a huge revenue amount, makes the marketing of their product crucial for sports teams and clubs, because marketing means attracting customers.

The paper you can download using the link below investigates and analyses the main marketing activities of the Rugby Football League (RFL), which is the governing body for Rugby League football in Britain and Ireland, in order to identify its current situation and possible issues. Passage four of the work explains the marketing mix using the example of the Leeds Rhinos, which is one of the most successful teams in the Super League (SL), the highest Rugby League club competition in Europe, administered by the RFL.  

Key aspects of this paper are among others:

• The orientation of sports
• Environmental issues affecting sport clubs (macro and micro)
• Competitive advantage in sports
• The 7 Ps of the marketing mix of the Leeds Rhinos

     The attached paper was submitted to Coventry University in November 2013 as part of the assessment requirements. Please feel free to download this work for future references.

      [DOWNLOAD] Marketing Activities of the Rugby Football League 

Shirt Sponsorships in North American Major Leagues Using the Example of the NBA

(Abstract, you can download the full paper using the link below)

Today’s sport business is far away from the status it once had. Professionalization and commercialisation are the terms that dominate many of nowadays sports leagues in different countries. Therefore it is hardly surprising that numerous teams passed the one billion dollar mark in terms of team value, like Manchester United ($2,23 billion), Real Madrid ($1,88 billion) or the New York Yankees ($1,85 billion). Clubs that participate in the world’s most famous competitions generate annual incomes that are easily comparable with medium and large-sized enterprises. One major source of revenue, for nearly all professional sports clubs, is the profitable commercialisation of their brand and their media presence through sponsorship agreements with different kinds of companies.

On the other side there are commercial companies that seek, pressured through the increasing competition among many markets, for effective ways to communicate and build their brands. Those companies are often willing to pay high amounts of money in order to associate their products and brands with a sport club, athlete or sport event.

Despite this obvious potential for sport clubs, many of the North American sport leagues have reservations towards particular forms of sport sponsorships. However, sponsorships are common tools in multiple areas like music, arts, culture in general and sports, whereby sport sponsorships are nowadays highest developed scope of sponsorships with an quota of between 50 and 70% of all sponsorships worldwide being associated with the sport business in 2005.

But why is this form of sponsorships so famous? The reasons for the rising and distinctive interest in sport sponsorships are diverse. Circumstances like an increasing public interest in sports, leading to high media coverage, as well as the growing amount of brands that target sport-lifestyle consumers could be considered as major reasons. On the other hand many companies seek for more effective marketing measures compared to traditional and less effective advertisings.

Shirt Sponsorships

Generally there are three established patterns in shirt sponsorships. The logo-free approach is mainly used in the North American major leagues and implies that there are no logos from sponsors on the player’s shirts. The restrained approach comprises for instance most of the European football leagues and is characterised through strict limitations on quantity and size of logos. The last group is called the unrestrained approach and gives nearly no restrictions about the number of logos. This approach is mainly followed in European ice hockey. Shirt sponsorships are a common sponsorship tool in most European top leagues. That is mainly because companies pay high amounts of money for the rights to display their logos on the shirts of the clubs. Because these deals are a valuable source of revenue and shirt sponsorships are widely accepted among the European fan scene, in the three big football leagues, Bundesliga, Premier League and La Liga (Liga BBVA), mostly all participating teams have currently contracts with shirt sponsors, or are actively searching for them. The latest record-breaking commitment was announced between Manchester United and the car manufacturer Chevrolet at the beginning of 2014. Chevrolet will replace the current shirt sponsor Aon from the upcoming season for an amount of $79.85 million per annum.

(Shirt) Sponsorships in the NBA

Based on facts like a high media coverage and a large public interest the NBA could be described as highly appealing and therefore as an suitable candidate for shirt sponsorship agreements. However, a comparison of the NBA with the European approach shows that the NBA seems to be much more restricted in terms of sponsor’s visibility. This is mainly due to the strong tradition of many sports in America as well as the fear of negative responses from the public. On the other hand there is the fact that teams are not invulnerable against financial issues like the Lockout situation of the NBA in 2011 demonstrated. This fact together with the financial interests of franchise owners and shareholders led to a first slightly rethinking of the NBA officials in terms of shirt sponsorships. Undoubtedly the decision for or against logos on players’ shirts is associated with pros and cons or in other words several risks and challenges. If and in how far the NBA is willing to take these risks in return for higher revenues, as well as the question whether supporters and fans would react in a negative way has not been proofed or decided yet. However that be, before making final decisions the NBA should conduct comprehensive researches on that issue.

The attached paper was submitted to Coventry University in March 2014 as part of the assessment requirements. It gives an overview about the theory of sponsorships in general including objectives and risks and challenges for sponsors and sponsees and summarizes some useful statistics about the value of sport sponsorships in Europe. Furthermore the paper discusses the issue of shirt sponsorships in most North American major leagues using the example of the NBA and compares the North American with the European approach. Please feel free to download this work for future references.

[DOWNLOAD] Shirt Sponsorships in North American Major Leagues